Citigroup Reportedly Agrees To Sell Real Estate Investment Unit To Apollo Global Management - Update

(RTTNews) - Global financial services provider Citigroup, Inc. (C: News ) reportedly agreed Tuesday to sell its real-estate investment business Citi Property Investors under Citi Holdings, to private equity firm Apollo Global Management LLC. The unit has about 65 investments in 26 countries with a net asset value of about $3.5 billion. The final negotiations on the deal is still underway, and is expected to close in the next few months.

Citi Property Investors is the real estate investment management business of Citi. A unit of Citi Alternative Investments, it invests clients' capital in private market real estate investment strategies designed with the objective to produce attractive absolute and risk-adjusted returns in North America, Europe and the Asia Pacific region. Citi Property currently manages about $12.5 billion, as of June 30, 2009, in gross real estate assets.

Founded in 1990, Apollo Global Management is a leading global alternative asset manager with a track record of successful private equity, distressed debt and mezzanine investing, and more recently, into senior debt investing.

The proposed deal comes on back of the news recently that Apollo was creating a Hong Kong-based real-estate team to focus on deals in Australia, Japan, and South Korea. The acquisition of Citi Property, its assets and more than 90 professionals will complement Apollo's action, and also will provide it a foothold in Europe.

The head of real estate at Apollo, Joseph Azrack, had from 2004 until June 2008 headed the Citigroup real estate unit, and left it as part of a number of high-profile departures from the bank against a backdrop of heavy losses in real estate. According to an earlier reports, Apollo Global Management and the Macquarie Group of Australia were among the finalists, but Apollo had the advantage due to Azrack's proximity to Citigroup.

In January 2009, Citigroup realigned its businesses into two, Citicorp and Citi Holdings, to optimize the company's global businesses for future profitable growth and opportunities, after reporting its fifth straight quarterly loss.

Citicorp focuses on leveraging the competitive advantages of the company's global universal bank in more than 100 countries. Meanwhile, Citi Holdings, which is made up of brokerage and retail asset management, local consumer finance and a special asset pool, focuses on tightly managing risks and losses, and maximizing the value of the assets.

Citigroup also abandoned in January 2009 its acquisition-fueled growth strategy that built the company from a small consumer-finance business into one of the world's largest financial institutions. The company intends to get back to its pre-merger looks by slimming-down.

To receive FREE breaking news email alerts for Citigroup Inc. and others in your portfolio

 1   2   Next Page